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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrantx
Filed by a Party other than the Registrant¨
Check the appropriate box:
| ¨ | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12 |
MD Technologies Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| x | No fee required. |
| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
| 1) | Title of each class of securities to which transaction applies: |
| 2) | Aggregate number of securities to which transaction applies: |
| 3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) | Proposed maximum aggregate value of transaction: |
| 5) | Total fee paid: |
| ¨ | Fee paid previously with preliminary materials. |
| ¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) | Amount Previously Paid: |
| 2) | Form, Schedule or Registration Statement No.: |
| 3) | Filing Party: |
| 4) | Date Filed: |
MD TECHNOLOGIES INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 1, 2004
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders (the Annual Meeting) of MD Technologies Inc., a Delaware Corporation (the Company), will be held on Saturday, May 1, 2004, at 10:00 a.m., CST, at 620 Florida St., Suite 200, Baton Rouge, Louisiana 70801, for the following purposes:
| (1) | To elect three directors. |
| (2) | To ratify the appointment of Comiskey & Company as independent auditors for the Company for the year ended December 31, 2004. |
| (3) | To attend to other matters that properly come before the meeting. |
Only stockholders owning the Company’s shares of common stock (Voting Stockholders) at the close of business on March 19, 2004 (the Record Date), are entitled to notice of and to vote at the Annual Meeting. A copy of the Annual Report on Form 10-KSB for the year ended December 31, 2003, is being mailed with these proxy materials.
The Board of Directors encourages you to read this document thoroughly and to take this opportunity to vote on the matters to be decided at the Annual Meeting.
All Voting Stockholders of record as of the Record Date are cordially invited to attend the Annual Meeting in person.
FOR THE BOARD OF DIRECTORS |
| /s/ William C. Ellison |
William C. Ellison Corporate Secretary |
New Orleans, LA
March 30, 2004
MD TECHNOLOGIES INC.
PROXY STATEMENT
FOR THE
2004 ANNUAL MEETING OF STOCKHOLDERS
ABOUT THE MEETING
General
The enclosed proxy is solicited on behalf of the Board of Directors of MD Technologies Inc., a Delaware Corporation (the “Company”), for use at the Annual Meeting of Stockholders (the “Annual Meeting”), to be held at 620 Florida St., Suite 200, Baton Rouge, Louisiana 70801, on Saturday, May 1, 2004, at 10:00 a.m., CST. The telephone number for inquiries is (225) 343-7169.
The mailing address of each of the Company’s principal executive officers is set forth on page 3 below.
What is the Purpose of the Annual Meeting?
At the Company’s Annual Meeting, holders (“Voting Stockholders”) of our shares of common stock (“Voting Securities”) will act upon matters outlined in the accompanying notice of the meeting and transact such other business that may properly come before the meeting. In addition, the Company’s management will report on the performance of the Company during fiscal 2003 and respond to questions from stockholders.
VOTING PROCEDURES
YOUR VOTE IS VERY IMPORTANT.
Who is Entitled to Vote?
Only Voting Stockholders of record at the close of business on the Record Date, will receive notice of the Annual Meeting and are entitled to vote at the Annual Meeting. Each outstanding share of common stock entitles its holder to cast one vote on each matter to be voted upon.
If you do not vote your proxy, your brokerage firm may either vote your shares on routine matters, such as election of directors or leave your shares without a vote. We encourage you to provide instructions to us by voting our proxy. This ensures your shares will be voted at the meeting.
These proxy solicitation materials were mailed on or about March 30, 2004, together with the Company’s Annual Report for the period ended December 31, 2003, to all Voting Stockholders entitled to vote at the meeting.
How Do I Vote?
You have two ways to vote. You may return the proxy card by mail, or vote in person. To vote by mail, you must sign your proxy card and send it in the enclosed prepaid, addressed envelope. If you mark your voting instructions on the proxy card, your shares will be voted as you instruct. If you return a signed card but do not provide voting instructions, your shares will be voted as recommended by the Board of Directors:
| ¨ | for the three named directors; |
| ¨ | for the ratification of the appointment of Comiskey & Company, as the Company’s auditors; |
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If you choose to vote in person, you will have an opportunity to do so at the Annual Meeting. You may either bring your proxy card to the Annual Meeting, or if you do not bring your proxy card, the Company will pass out written ballots to anyone who was a Voting Stockholder as of the Record Date.
What if I Change My Mind After I Return My Proxy Card?
You may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting. You may do this by:
| ¨ | signing another proxy with a later date (the proxy with the latest date is counted); |
| ¨ | voting in person at the Annual Meeting. |
What Does it Mean if I Receive More Than One Proxy Card?
It means you have multiple accounts with the transfer agent and/or with brokers. If you would like to cancel duplicate mailings, you may authorize the Company to discontinue mailings of multiple annual reports by marking the appropriate box on each proxy card.
What Constitutes a Quorum?
The presence, in person or by properly executed proxy, of the holders of a majority of the Voting Securities outstanding as of the Record Date constitutes a quorum at the Annual Meeting. Voting Securities that voted For, Against or Withheld on the proposals are treated as being present at the meeting for purposes of establishing a quorum and are deemed to be votes cast at the Annual Meeting with respect to the proposals. Signed, unmarked proxy cards are voted as recommended by the Board of Directors. A majority of the votes duly cast is required for the election of directors. The affirmative vote of a majority of the votes duly cast is required for the ratification of the appointment of the independent auditors.
Abstentions and broker non-votes will be included for purposes of determining whether a quorum is present at the Annual Meeting. However, abstentions and broker non-votes will not be included in the tabulation of the voting results on the election of directors or on issues requiring approval of a majority of the votes duly cast.
As of the Record Date, a total of 3,939,313 shares of the Company’s common stock were issued and outstanding. The common stockholders would be entitled to 3,939,313 votes for the Company’s currently outstanding Voting Securities. For information regarding security ownership by management and by the beneficial owners of more than 5% of the Company’s Voting Securities, see Security Ownership of Management and Certain Securityholders.
Who Will Count the Vote?
The Company’s Inspector of Elections will tally the vote. The Inspector of Elections will be the Company’s Secretary, William C. Ellison, Esq.
Who is Soliciting This Proxy?
Solicitation of proxies is made on behalf of the Board of Directors of the Company. The Company will pay the cost of preparing, assembling and mailing the notice of Annual Meeting, proxy statement and proxy card. In addition to the use of mail, proxies may be solicited by directors, officers and regular employees of the Company, without additional compensation, in person or by telephone or other electronic means.
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INFORMATION CONCERNING THE BOARD OF DIRECTORS
In accordance with Delaware General Corporation Law and the Company’s Amended Certificate of Incorporation and By-Laws (the “By-Laws”), the Company’s business, property and affairs are managed under the direction of the Board of Directors.
Meetings of the Board of Directors. The Board of Directors held nine meetings in 2003. Each of the incumbent directors attended at least 75% of the Board of Directors meetings. The incumbent directors in the aggregate attended at least 75% of their Board of Directors meetings.
Currently, the Board has six members, including two outside directors. The members of the Board serve three year staggered terms. Our executive officers serve at the discretion of the Board of Directors. The following table sets forth information regarding the names and ages of and positions held by each of our executive officers and the members of the Board of Directors.
| Name | Age | Date Joined Board | Position | |||
Jose S. Canseco* | 45 | 2/25/2000 | Vice President of Policy and Planning, Chairman, Board of Directors | |||
William D. Davis* | 35 | 2/25/2000 | President & CEO, Director | |||
William C. Ellison* | 43 | 2/25/2000 | Secretary, General Counsel, Director | |||
Kenneth E. Thorpe, Ph.D. | 46 | N.A. | Chairman, Technical Advisory Board | |||
Thomas L. Frazer | 58 | 6/4/2002 | Director | |||
William J. Burnell | 52 | 6/4/2002 | Director | |||
Terry Jones | 40 | 6/4/2002 | Vice President of Finance, Director | |||
Joseph Palazzo | 60 | N.A. | Executive Vice President, Sales & Marketing | |||
*The mailing addresses for the principal executive officers are as follows: Jose S. Canseco, 2809 E. Judge Perez Dr., Meraux, LA 70075, William D. Davis, 620 Florida St., Suite 200, Baton Rouge, LA 70801; William C. Ellison, Bordelon, Hamlin and Theriot, 701 S. Peters St., Suite 100, New Orleans, LA 70130.
The following biographies describe the business experience of our executive officers and managers.
Jose S. Canseco, Vice President of Policy and Planning and Chairman of the Board of Directors
Mr. Canseco, age 45, one of the founders of the Company, is a 1981 graduate of Louisiana State University with a degree in accounting and a 1984 graduate of the Paul M. Hebert Law School at Louisiana State University. Mr. Canseco has over 18 years of experience in business and commercial practice, commercial litigation, governmental relations and in intellectual property law. Mr. Canseco is active in his community, taking a leadership role in several civic and business boards. He is currently Chairman of the Board of the Louisiana Artist Guild, Inc. (from 1992 to Present); Vice-President of the Arts Council of New Orleans (from 1992 to Present); Member of the Board of Directors of the Louisiana State Arts Council (from 2002 to Present); Member of the Governor’s Latin American Business Initiative (from 1997 to Present); Member of the Board of Directors and Secretary of the Canal Street Development Corporation (from 2003 to Present); and Member of the New Orleans Hispanic Heritage Foundation (from 1989 to Present). Mr. Canseco has served as an officer on the Orleans Private Industry Council (from 1990 to 1991); the Greater New Orleans Chapter of the Volunteers of America (from 1996 to 1998); the World Trade Center International Committee (from 1989 to 1991); the Hispanic Political Action Committee (from 1989 to 1991); the New Century New Orleans City Master Plan Committee (from 1989 to 1991); and The Mayor of New Orleans’ International Council (from 1988 to 1994). Mr. Canseco is responsible for directing the Company’s business and strategic directions. From December 1997 to July 2001, Mr. Canseco was a General Partner with the Law Firm of Barton, Richardson, Canseco and Whitney, L.L.P. From January 2002 to Present, Mr. Canseco has been the General Counsel of United States Environmental Services, L.L.C., responsible for all corporate legal affairs of that entity.
From February 2000 to the present Mr. Canseco has served as a director. In addition, from August 2001 to March 2003, he was CEO of MD Technologies Inc. Mr. Canseco relinquished that post in March 2003 and now serves as Vice President of
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Policy and Planning of MD Technologies Inc. His duties have included assisting Mr. Davis and the Company with strategic planning and direction.
William D. Davis, President and Chief Executive Officer, Director
Mr. Davis, age 35, one of the founders of the Company, is a graduate of Louisiana State University in Electrical Engineering. As a pioneer in designing Internet enabled applications, he has been the driving force in bringing to market the first fully functional Internet-based healthcare application in the mid 1990’s. He has over fifteen years professional experience in various industry markets such as healthcare, education, and law. Mr. Davis oversees the company’s operations, develops strategies for execution of the company’s business plan, and assists with advanced research and development of the company’s next generation products. Mr. Davis was President of LISTech, Inc., a software development company in Baton Rouge, La. from January 1993 to July 2003. He has been President of Davis Research Group, Inc., a Louisiana based company with 3 employees that provides outsourced software development to the healthcare industry from January 2002 to January 2004 (Davis Research Group, Inc. ceased doing business in January 2004). From February 2000 to March 2003, Mr. Davis served as a director and was the Chief Technology Officer of MD Technologies Inc. and was responsible for overseeing the development and deployment of the Company’s products and services. From March 2003 to Present, Mr. Davis has served as director and President and CEO of MD Technologies Inc.
Joseph Palazzo, Executive Vice President of Sales & Marketing
Mr. Palazzo, age 60, is the most recent addition to the team, having joined the Company in July of 2001. Mr. Palazzo has a unique blend of knowledge and experience that complement the team. After receiving a degree in physics and math from Loyola University in New Orleans, Mr. Palazzo began his professional career as a programmer for UNISYS Corporation in 1967 and then moved into sales. Beginning with Medical Industry experience while at UNISYS from 1967 to September 1984, Mr. Palazzo has over 17 years of experience in the sales and support of physician practice management products. In 1990, Mr. Palazzo started and owned one of the largest distributorships of Medical Manager, one of the leading products in the medical management software industry. Mr. Palazzo sold his distributorship to Medical Manager Corporation and came out of semi-retirement to join the team. Prior to starting his Medical Manager distributorship in 1990, Mr. Palazzo started and served as the CEO and President of Qualified Technology Inc., a computer hardware and networking company in Baton Rouge, LA, where he sold hardware, software, and networking services to the medical community from 1986 to 1991. Mr. Palazzo sold his distributorship to Medical Manager Corporation in 1998 and continued to work for that company until November 1999. He then worked as an independent small business consultant until joining MD Technologies in July 2001 as the Executive Vice President of Sales and Marketing. Mr. Palazzo’s unique blend of knowledge and talents in software design and writing, hardware and network installation and support and service, and healthcare practice management sales and support, makes him well suited to help the Company evolve from a research and development mode to a sales and customer support mode.
Kenneth E. Thorpe, Ph.D., Chairman, Technical Advisory Board
Dr. Thorpe, age 46, is currently the Robert W. Woodruff Professor and Chair of the Department of Health Policy & Management, in the Rollins School of Public Health of Emory University, Atlanta, Georgia, and has served in such capacity since September 1999. Previously, from September 1995 to August 1999, he was a Vanselow Professor of Health Systems Management at Tulane University School of Public Health and Tropical Medicine. From 1995 to 1999, he was a Director, Institute for Health Services Research, Tulane University School of Public Health and Tropical Medicine. Dr. Thorpe received his Ph.D. from the Rand Graduate School, his M.A. from Duke University and his B.A. from the University of Michigan. He was previously Professor of Health Policy and Administration at the University of North Carolina at Chapel Hill from 1994 to 1995, Associate Professor and Director of the Program on Health Care Financing and Insurance at the Harvard University School of Public Health from 1988 to 1990, and Assistant Professor of Public Policy and Public Health at Columbia University from 1983 to 1986. Dr. Thorpe has also held visiting faculty positions at Pepperdine University (1981 to 1984) and Duke University (1991).
From 1993 to 1995, Dr. Thorpe was Deputy Assistant Secretary for Health Policy in the U.S. Department of Health and Human Services. In this capacity, he coordinated all financial estimates and program impacts of President Clinton’s health care reform proposals for the White House. He also directed the administration’s estimation efforts in dealing with congressional health care reform proposals during the 103rd and 104th Congresses. As an academic, he has testified before several committees in the U.S. Senate and House on health care reform and insurance issues. In 1991, Dr. Thorpe was
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awarded the Young Investigator Award presented to the most promising health services researcher in the country under age 40 by the Association for Health Services Research. He also received the Hettleman Award for scholarly research at the University of North Carolina and was awarded an “Up and Comers” award byModern Healthcare.Dr. Thorpe has authored or co-authored over 60 articles, book chapters and books and is a frequent speaker on issues of health care financing, insurance, and health care reform at health care conferences and in the media. He also serves as a reviewer on several health care journals.
Dr. Thorpe is responsible for assisting in the development of the company’s vision. Dr. Thorpe seeks business opportunities and strategic alliances with other organizations and is responsible for planning, developing and establishing policies of the Company. Dr. Thorpe was appointed as the Chairman of the Policy and Planning Board in February, 2000. He resigned that position and became Chairman of the Technical Advisory Board in June, 2002.
William C. Ellison, Secretary and General Counsel, Director
Mr. Ellison, age 43, was a 1986 graduate of the University of Mississippi School of Law, where he served as a member of the Moot Court Board from 1984-1986. Mr. Ellison has sixteen (16) years of legal experience in the areas of products liability, intellectual property, commercial litigation, insurance law and general tort litigation. He is also a contributing editor to the Products Liability Desk Reference, A Fifty State Compendium since 1993 and the Tort Litigation Desk Reference, A Fifty State Compendium since 1999. From January 1995 to Present, Mr. Ellison has been a General Partner with the Law Firm of Bordelon, Hamlin and Theriot, in New Orleans, La., specializing in products liability and general practice of law. From February 2000 to Present, Mr. Ellison has served as a director and Secretary and General Counsel of MD Technologies Inc.
Thomas L. Frazer, Director
Mr. Frazer, age 58, holds bachelor’s (1967) and master’s (1969) degrees in accounting from Louisiana State University. He is a partner in Frazer & Persac, A Professional Accounting Corporation, a CPA practice specializing in tax and financial services since 1980. He is a Certified Financial Planner and a member of AICPA and Louisiana Society of CPA’s. From September 2000 to Present, Mr. Frazer served as a Director of TilTech Aquaculture, LLC, an aquaculture firm, and is a former Director of numerous other companies, including Fifth Generations Systems, Inc. (January 1987 to October 1993), a software firm with $50,000,000+ in sales annually, where he was Chairman and the largest individual shareholder. He also served as a Vice President and Director of Helix BioMedix, Inc., a public biopharmaceutical company focusing on the discovery, synthesis and commercialization of novel, bioactive lytic peptides proprietarily termed Cytoporins, from October 1994 until September 1999, and served as Vice President – Treasurer, Chief Financial Officer and Director from October 1999 until June 2001. Mr. Frazer is active in numerous civic organizations. He is currently President of the City Club Foundation (January 2003 to Present), Treasurer and Chair of the Audit Committee of Pennington Biomedical Research Foundation (January 2003 to Present), Chairman of the Board of St. James Place, a continuing care retirement community (July 2003 to Present), and a Member of the Investment Committee, Baton Rouge Area Foundation (January 2002 to Present). Mr. Frazer is also active in other business endeavors such as real estate and the organization of several local companies. He has served as a director since June 2002.
William J. Burnell, Director
Mr. Burnell, age 52, has worked primarily in financial services, small business lending, and the banking industry, technology and economic development. He is currently President and Executive Director of Business Resource Capital Specialty Business and Industrial Development Corp. (BRC), and has served in such capacity since March 1999. From March 2000 to Present, Mr. Burnell has served as the Executive Director and President of the New Orleans Regional Loan Corp., a non-profit corporation formed in 1978 to assist local governments in promoting business expansion and development in southeastern Louisiana. Mr. Burnell is responsible for the management as well as the budget and financial decisions and direction for both companies. He also deals with local, state and federal business economic programs in providing financing programs and technical assistance to small and emerging businesses in southeastern Louisiana. From October 1988 to November 1999, Mr. Burnell was employed with Oracle Corporation as a practice manager in the financial services sector, where he provided information technology consulting to financial institutions in the Southeast. He was employed from September 1976 to June 1998 with First Commerce Corporation, a $10 billion bank holding company located in New Orleans, LA, as a Senior Vice-President and Team Leader for the Credit Review and Audit Division, where
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he had overall responsibility for maintaining and reporting on the company’s assets. Mr. Burnell has served as a director since June 2002.
Terry Jones, Vice President of Finance, Director
Mr. Jones, age 40, graduated from Louisiana State University with a B.S. in Finance. From November 2000 to Present, he has been President of SBL Capital Corporation, a Louisiana Certified Capital Company (“CAPCO”). SBL has investments in various industries, including wireless technology and software technology. From January 1998 to Present, Mr. Jones has been President of Dean Capital, L.L.C., which provides financial consulting services to businesses. Prior to Dean Capital, Mr. Jones was a Regional Vice President with the Business Loan Center (“BLC”), a New York based publicly traded non-bank lender (January 1998 to December 1998). He joined BLC after leaving Source Capital where he served as a Vice President and Director of Underwriting and managed venture capital deals and conducted corporate finance work including debt/equity placements (January 1995 to December 1997). Mr. Jones has been recognized for his professional and civic achievements and was a founder of the Iberville Business Incubator. He is also a Board Member and investor for several companies other than MD Technologies Inc., including SBL Capital Corporation (October 2000 to Present), Dean Capital, L.L.C. (January 1998 to Present), Medi-Clean, LLC (December 2001 to Present), and Affiliated Pasta Restaurant Group (May 2002 to Present). Mr. Jones has been a director since June 2002 and Vice President of Finance from September 2003 to Present.
Committees of the Board of Directors. The Board of Directors has established a standing audit committee. This committee is not yet active. The members of the committee are Thomas Frazer and William Burnell. We expect the audit committee to start operations shortly after this meeting.
Director Compensation. Directors do not receive cash compensation for their services as directors; however, they are reimbursed for the expenses they incur in attending meetings of the Board of Directors or Board committees, and stock options have been awarded in the past to directors for services rendered. Directors of the Company are also eligible to receive options to purchase shares of common stock awarded under the Company’s 2003 Nonqualified Stock Option Plan.
Fees Paid to Independent Accountants. The Securities and Exchange Commission’s Final Rule on Auditor Independence requires that the Company make the following disclosures regarding the amount of fees billed by its independent auditors and the nature of the work for which these fees were billed:
Audit Fees. Aggregate fees and expenses incurred for Comiskey & Company’s audit of the Company’s annual financial statements for the year ended December 31, 2003, and for its audit of the Company’s annual report for year ended December 31, 2003 on Form 10-KSB totaled $25,791.10. Of this amount, $18,791.10 had been billed as of December 31, 2003. The balance of the fees was billed prior to the date of this Proxy Statement.
Financial Information Systems Design and Implementation Fees. There were no fees billed for any financial information systems design and implementation services rendered by Comiskey & Company for the year ended December 31, 2003.
All Other Fees. There were no other fees billed as of December 31, 2003.
REMUNERATION OF DIRECTORS AND OFFICERS
The Company has entered into five-year employment agreements with William D. Davis and Jose S. Canseco. The annual salary set forth in these contracts is $102,000 and $97,000, respectively. We also entered into an employment agreement with Terry Jones on September 24, 2003 to hire Mr. Jones as Vice President of Finance. Mr. Jones’ contract is not subject to a term and his annual salary is $95,000. Each of these employment agreements sets forth the base salary for the first year only, and provides that the annual base salary shall be reviewed before January 1 of each year by the Board of Directors to determine if such salary should be increased for the following year. Each of these agreements further provides that the salary shall be increased yearly by at least the amount of the increase in the Consumer Price Index for All Urban Consumers for the past year. The following table sets forth certain information regarding compensation for fiscal year 2003.
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Summary Compensation Table
| Officer | Position | Cash | Options(4) | ||||
Jose S. Canseco(1) | Chairman, Board of Directors, Vice President of Policy and Planning | 0 | 14,374 | ||||
William D. Davis(2) | CEO, President, Director | 0 | 14,374 | ||||
William C. Ellison | Secretary, General Counsel, Director | 0 | 14,374 | ||||
Thomas L. Frazer | Director | 0 | 4,161 | ||||
William J. Burnell | Director | 0 | 4,161 | ||||
Terry Jones(3) | Vice President of Finance, Director | 4,161 | |||||
Joseph Palazzo | Executive VP, Sales and Marketing | $ | 60,000 | ||||
Kenneth E. Thorpe, Ph.D. | Chairman, Technical Advisory Board | 0 | |||||
| (1) | Mr. Canseco did not draw a salary in 2003. His annual salary is now $97,000. |
| (2) | Mr. Davis did not draw a salary in 2003. His annual salary is now $102,000. |
| (3) | Mr. Jones is the owner of Dean Capital, L.L.C. and SBL Capital Corporation. These entities have received 17,500 and 7,500 options respectively for services rendered to the Company. His annual salary is now $95,000. |
| (4) | The Board of Directors granted the options listed for past services rendered including services in 2002 and 2003. The strike price of each option is $2.40 and the options expire on April 23, 2008. |
Nonqualified Stock Option Plan
On August 6, 2003, the Board of Directors adopted the MD Technologies Inc. Nonqualified Stock Option Plan. The plan is intended to provide incentives to keep key employees, directors and consultants, and others expected to provide significant services to us. The goals of the plan are:
| • | To encourage proprietary interest in MD Technologies; |
| • | To encourage key employees to remain in our employ; |
| • | To attract new employees with outstanding qualifications; and |
| • | To provide additional incentive to consultants, vendors, and others to increase their efforts in providing significant services to MD Technologies. |
The plan is administered by the Board of Directors or can be administered by a committee appointed by the Board, which committee shall consist of not less than two directors. The Board of Directors, or the committee if there is one, at its discretion, can select the eligible employees and consultants to be granted awards and determine the number of shares to be applicable to such award. The shares subject to awards granted under the plan are shares of common stock that are authorized but unissued. The aggregate number of shares which may be issued as awards or upon exercise of awards under the plan is 1,000,000 shares (250,000 shares after giving effect to the reverse stock split). No options have been issued under the plan to date. The shares that may be issued pursuant to the exercise of an option awarded by the plan will not be registered under the Securities Act of 1933.
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Indemnity
The Certificate of Incorporation of the Company provides for indemnification of the Company’s Directors and Officers to the fullest extent permitted by applicable law, which may include liabilities under the 1933 Act. The General Corporation Law of Delaware empowers a corporation to indemnify its officers and directors for judgments, settlements, penalties, fines, or expenses incurred by such officer or director because he or she was acting in that capacity.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The following table sets forth, as of the Record Date, certain information with respect to the beneficial ownership of shares of common stock of MD Technologies by each person known to beneficially own five percent (5%) or more of the outstanding equity and each of the officers and directors.
| Name | Number of Shares | Percent of Total Equity | |||
William D. Davis(1) | 882,467 | 22.3 | % | ||
Ricardo Marcos, Jr.(2) | 479,999 | 12.1 | % | ||
Jose S. Canseco(3) | 511,249 | 12.9 | % | ||
William C. Ellison(4) | 139,374 | 3.5 | % | ||
Thomas L. Frazer(5) | 60,411 | 1.5 | % | ||
Frank Fazio, M.D. | 25,000 | 0.6 | % | ||
Kenneth Thorpe, Ph.D. | 131,250 | 3.3 | % | ||
William J. Burnell(6) | 79,161 | 2.0 | % | ||
Terry Jones(7) | 29,161 | 0.7 | % | ||
Joseph Palazzo | 37,498 | 1.0 | % | ||
All officers and directors as a group(1) (2) (3) (4) (5) (6) (7) | 1,870,571 | 45.9 | % | ||
| (1) | This amount includes 251,644 shares owned by Mr. Davis’s wife, Dawn Haase-Davis and 14,374 shares that may be acquired through the exercise of options to purchase our shares at an exercise price of $2.40. |
| (2) | Includes 14,374 shares that may be acquired through the exercise of options to purchase our shares at an exercise price of $2.40. |
| (3) | Includes 14,374 shares that may be acquired through the exercise of options to purchase our shares at an exercise price of $2.40, 12,500 shares held in the name of the Emily McQuown Ellison Trust, and 12,500 shares held in the name of the Ara Alexandra Ellison Trust, of which two trusts Mr. Canseco serves as trustee. |
| (4) | Includes 14,374 shares that may be acquired through the exercise of options to purchase our shares at an exercise price of $2.40, and 50,000 shares that may be acquired through the exercise of options to purchase our shares at an exercise price of $2.00. |
| (5) | Includes 50,000 shares held in the name of Frazer Technology, LLC, which is wholly owned by Tommy Frazer, 4,161 shares that may be acquired through the exercise of options to purchase our shares at an exercise price of $2.40, and 6,250 shares that may be acquired through the exercise of warrants to purchase our shares at an exercise price of $2.40. |
| (6) | Includes 75,000 shares held in the name of BRC Specialty BIDCO, Inc., which is controlled by Mr. Burnell, and 4,161 shares that may be acquired through the exercise of options to purchase our shares at an exercise price of $2.40. |
| (7) | Includes 4,161 shares that may be acquired through the exercise of options to purchase our shares at a strike price of $2.40 held by Mr. Jones and 7,500 shares that may be acquired through the exercise of warrants to purchase our shares at a strike price of $2.00 held by SBL Capital Corporation, which is wholly owned by Mr. Jones and 17,500 shares that may be acquired through the exercise of options to purchase our shares at a strike price of $2.00 held by Dean Capital, L.L.C., which is wholly owned by Mr. Jones. |
Options, Warrants and Rights
The following table sets forth, as of the date hereof, certain information with respect to the beneficial ownership of options for shares of common stock of MD Technologies by each person known to beneficially own five percent (5%) or more of the outstanding equity and each of the officers and directors.
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| Name of Holder | Title of Securities | No. of Options | Exercise Price | Expiration Date | |||||
Jose S. Canseco | Option to Purchase Common Stock | 14,374 | $ | 2.40 | 4/23/2008 | ||||
William D. Davis | Option to Purchase Common Stock | 14,374 | $ | 2.40 | 4/23/2008 | ||||
William C. Ellison | Option to Purchase Common Stock | 14,374 50,000 | $ $ | 2.40 2.00 | 4/23/2008 Indefinite | ||||
Thomas L. Frazer | Option to Purchase Common Stock | 4,161 | $ | 2.40 | 4/23/2008 | ||||
| Warrant to Purchase Common Stock | 6,250 | $ | 2.40 | 8/8/2008 | |||||
William J. Burnell | Option to Purchase Common Stock | 4,161 | $ | 2.40 | 4/23/2008 | ||||
Terry Jones | Option to Purchase Common Stock | 4,161 | $ | 2.40 | 4/23/2008 | ||||
Dean Capital, L.L.C.(1) | Option to Purchase Common Stock | 17,500 | $ | 2.00 | 12/12/2005 | ||||
SBL Capital Corporation(1) | Warrant to Purchase Common Stock | 7,500 | $ | 2.00 | Indefinite | ||||
| (1) | Wholly owned by Terry Jones. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, the founders of MD Technologies have advanced funds to us in return for promissory notes. Total loans from management represented $247,046.42 as of December 31, 2003. These loans have all been paid. The following table sets forth the interest rate, maturity date and pay off date of each of these loans.
| Payee | Loan Amount | Date | Interest Rate | Maturity Date | Payoff Date | |||||||
SBL Capital Corp.(1) | $ | 30,000.00 | 11/15/01 | 18 | % | 12/1/06 | 1/17/04 | |||||
William C. Ellison | $ | 100,000.00 | 12/12/01 | 12 | % | 6/30/04 | 1/17/04 | |||||
Jose S. Canseco | $ | 36,945.00 | 6/24/02 | 8 | % | On Demand | 1/17/04 | |||||
William D. Davis | $ | 35,101.42 | 7/9/02 | 8 | % | On Demand | 1/17/04 | |||||
Thomas L. Frazer | $ | 25,000.00 | 8/8/03 | * | 3/8/04 | 1/17/04 | ||||||
William J. Burnell | $ | 10,000.00 | 11/24/03 | * | 5/24/04 | 1/17/04 | ||||||
Thomas L. Frazer | $ | 10,000.00 | 11/26/03 | * | 5/26/04 | 1/17/04 | ||||||
| (1) | Wholly owned by Terry Jones. |
| * | The lesser of the Wall Street Journal Prime Rate or the maximum rate allowed under applicable law. The interest rate as of November 5, 2003 is 4%. |
Dean Capital, L.L.C. and SBL Capital Corporation, which are wholly owned and controlled by Terry Jones, provided financial consulting services to the Company. These entities have received 17,500 options and 7,500 warrants, respectively, for services rendered to the Company. The strike price of these options and warrants is $2.00. The options expire on 12/12/05 and the warrants may be exercised indefinitely.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require the Company to disclose late filings of stock transaction reports by its executive officers and directors. Based solely on a review of reports filed by the Company on these individuals’ behalf, all Section 16(a) filing requirements have been met during fiscal year 2003, except that the initial statements of beneficial ownership of equity securities required to be filed by the executive officers and directors on Form 3 under Section 16(a) were filed late. The Form 3’s reporting the initial ownership of William D. Davis, Ricardo Marcos, Jr., Jose S. Canseco, William C. Ellison, Thomas L. Frazer, William J. Burnell, Terry Jones, and Joseph Palazzo were due to be filed on December 22, 2003. However, as a result in a delay in listing with NASDAQ, the forms were filed on January 9, 2004. This was the only late report for each person and the only transaction that was not reported on a timely basis.
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OVERVIEW OF PROPOSALS
ELECTION OF DIRECTORS
ITEM 1 ON PROXY CARD
Nominees and Directors
Our Board of Directors currently consists of six members, with two members in each of three classes of directors serving staggered three year terms. The terms of the two Class 1 Directors expire, and a seventh member is to be elected, at this Annual Meeting. At the meeting, three Class 1 Directors will be elected to serve until the third annual meeting of stockholders after their election or until their successors are elected and qualified. The three nominees receiving the greatest number of votes cast by the holders of the Voting Securities entitled to vote at the Annual Meeting will be elected directors of MD Technologies Inc. (assuming a quorum is present). We have no reason to believe that any nominee of the Board will be unable to serve if elected. A vote FOR the nominees includes discretionary authority to vote for a substitute nominee named by the Board if any of the nominees become unable or unwilling to serve.
Director candidates are nominated by the Board of Directors. Stockholders are entitled to nominate candidates for the Board of Directors in accordance with the procedures set forth in the By-Laws.
The following persons have been nominated by the Board for election to the Board of Directors.
| Person | Age | Position | ||
Terry Jones | 40 | Vice President of Finance and Director | ||
William J. Burnell | 52 | Director | ||
Frank Fazio, M.D. | 52 | |||
Terry Jones. Mr. Jones, age 40, graduated from Louisiana State University with a B.S. in Finance. From November 2000 to Present, he has been President of SBL Capital Corporation, a Louisiana Certified Capital Company (“CAPCO”). SBL has investments in various industries, including wireless technology and software technology. From January 1998 to Present, Mr. Jones has been President of Dean Capital, L.L.C., which provides financial consulting services to businesses. Prior to Dean Capital, Mr. Jones was a Regional Vice President with the Business Loan Center (“BLC”), a New York based publicly traded non-bank lender (January 1998 to December 1998). He joined BLC after leaving Source Capital where he served as a Vice President and Director of Underwriting and managed venture capital deals and conducted corporate finance work including debt/equity placements (January 1995 to December 1997). Mr. Jones has been recognized for his professional and civic achievements and was a founder of the Iberville Business Incubator. He is also a Board Member and investor for several companies other than MD Technologies Inc., including SBL Capital Corporation (October 2000 to Present), Dean Capital, L.L.C. (January 1998 to Present), Medi-Clean, LLC (December 2001 to Present), and Affiliated Pasta Restaurant Group (May 2002 to Present). Mr. Jones has been a director since June 2002 and Vice President of Finance from September 2003 to Present.
William J. Burnell. Mr. Burnell, age 52, has worked primarily in financial services, small business lending, and the banking industry, technology and economic development. He is currently President and Executive Director of Business Resource Capital Specialty Business and Industrial Development Corp. (BRC), and has served in such capacity since March 1999. From March 2000 to Present, Mr. Burnell has served as the Executive Director and President of the New Orleans Regional Loan Corp., a non-profit corporation formed in 1978 to assist local governments in promoting business expansion and development in southeastern Louisiana. Mr. Burnell is responsible for the management as well as the budget and financial decisions and direction for both companies. He also deals with local, state and federal business economic programs in providing financing programs and technical assistance to small and emerging businesses in southeastern Louisiana. From October 1988 to November 1999, Mr. Burnell was employed with Oracle Corporation as a practice manager in the financial services sector, where he provided information technology consulting to financial institutions in the Southeast. He was employed from September 1976 to June 1998 with First Commerce Corporation, a $10 billion bank holding company located in New Orleans, Louisiana, as a Senior Vice-President and Team Leader for the Credit Review
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and Audit Division, where he had overall responsibility for maintaining and reporting on the company’s assets. Mr. Burnell has served as a director since June 2002.
Frank Fazio, M.D., FACS Dr. Fazio, age 52, has been in the private practice of ear, nose and throat medicine and surgery in Baton Rouge, Louisiana since 1981 and plans to practice medicine for several more years. Dr. Fazio graduated from L.S.U. Medical School in 1976 and he completed his General Surgery, research and E.N.T. training at Charity Hospital and the Kresgie Hearing Lab of the South, both located in New Orleans.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THREE OF THE LISTED NOMINEES.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
ITEM 2 ON PROXY CARD
Subject to the ratification of the Voting Stockholders, the Board of Directors has appointed the firm of Comiskey & Company, certified public accountants, as independent accountants to examine the financial statements of the Company for fiscal 2004. Ratification requires the affirmative vote of a majority of eligible Voting Securities present at the Annual Meeting, in person or by proxy, and voting thereon. Unless otherwise specified by the Voting Stockholders, the shares of stock represented by the proxy will be voted for ratification of the appointment of Comiskey & Company as independent accountants to audit and report upon the financial statements of the Company for fiscal year 2004. If this appointment is not ratified by stockholders, the Board of Directors may reconsider its recommendation.
Audit services of Comiskey & Company during 2003 included the examination of the financial statements of the Company and services related to filings with the SEC.
The Audit Committee intends to meet with Comiskey & Company in 2004 on a quarterly or more frequent basis. At such times, the Audit Committee will review the services performed by Comiskey & Company, as well as the fees charged for such services. Representatives of Comiskey & Company are not expected to be present at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF COMISKEY & COMPANY AS INDEPENDENT AUDITORS OF MD TECHNOLOGIES INC.
INCIDENTAL MATTERS
ADDITIONAL INFORMATION
A copy of the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2003, including the financial statement schedules, as filed with the Securities and Exchange Commission is enclosed with this proxy statement. Additional copies may be obtained by stockholders without charge by sending a written request therefor to William C. Ellison, Secretary, MD Technologies Inc., 620 Florida St., Suite 200, Baton Rouge, LA 70801.
SUBMISSION OF STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS
Stockholders wishing to have a proposal included in the Board of Directors’ 2005 Proxy Statement must submit the proposal so that the Secretary of the Company receives it no later than December 31, 2004 at the Company’s principal address, 620 Florida St., Suite 200, Baton Rouge, LA 70801. The Securities and Exchange Commission rules set forth standards as to what stockholder proposals are required to be included in a proxy statement. The Company’s By-Laws set forth certain informational requirements for stockholders’ nominations of directors.
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OTHER BUSINESS
The Company is not aware of any other matters that will be presented for stockholder action at the Annual Meeting. If other matters are properly introduced, the person named in the accompanying proxy will vote the shares they represent in accordance with their judgment.
| BY ORDER OF THE BOARD OF DIRECTORS |
/s/ William C. Ellison |
William C. Ellison, Secretary |
March 30, 2004
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MD TECHNOLOGIES INC. PROXY FOR ANNUAL MEETING OF SHAREHOLDERS MAY 1, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned shareholder of MD TECHNOLOGIES INC., a Delaware corporation, does hereby constitute and appoint WILLIAM D. DAVIS, JOSE S. CANSECO and WILLIAM C. ELLISON, or any one of them, with full power to act alone and to designate substitutes, the true and lawful attorneys and proxies of the undersigned for and in the name and stead of the undersigned, to vote all shares of Common Stock of MD Technologies Inc. which the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders to be held at 620 Florida St., Suite 200, Baton Rouge, Louisiana 70801, on May 1, 2004 at 10 a.m., and at any and all adjournments and postponements thereof, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ON ITEMS 1 AND 2.
| ITEM 1. ELECTION OF DIRECTORS | ITEM 2. RATIFICATION OF INDEPENDENT ACCOUNTANTS | |||||||||
Nominees: Terry Jones William J. Burnell Frank Fazio, M.D. | VOTE FOR ALL* ¨ | WITHHELD FOR ALL ¨* | FOR ¨ | AGAINST ¨ | ABSTAIN ¨ | |||||
| *To withhold authority to vote for one or more nominee(s), write the name(s) of the nominee(s) below: | Please mark your vote as indicated in this examplex | |||||||||
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 AND WILL GRANT DISCRETIONARY AUTHORITY TO THE PROXIES TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR AT ANY ADJOURNMENTS THEREOF. NOTE: PLEASE DATE THIS PROXY, SIGN YOUR NAME EXACTLY AS IT APPEARS HEREON, AND RETURN PROMPTLY USING THE ENCLOSED POSTAGE PAID ENVELOPE. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
| Signature(s) | Date | |
| Print Name: | ||
Your Name Must Be Printed Where Indicated. If We Can Not Read Your Signature Your Vote Will Not Be Counted.