SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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| | 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 toss. 240.14a-11(c) orss. 240.14a-12
Elecsys Corporation
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(Name of Registrant as Specified In Its Charter)
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(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:
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previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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ELECSYS CORPORATION
15301 WEST 109TH STREET
LENEXA, KANSAS 66219
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 9, 2003
You are invited to attend the annual meeting of the stockholders of Elecsys
Corporation (the "Company"), which will be held at the Lenexa Conference Center,
11184 Lackman Road, Lenexa, Kansas on Tuesday, September 9, 2003, commencing at
2:00 p.m. local time, to consider and act upon the following matters and such
other business as may properly come before the meeting or any adjournment of the
meeting:
1. The election of one (1) Class I Director to serve for a term of three
years expiring in 2006 and the election of one (1) Class II Director
to serve for a term of one year expiring in 2004;
2. The ratification of the Board of Directors' appointment of Ernst &
Young LLP as independent public accountants of the Company.
Holders of record of the outstanding common stock of the Company at the
close of business on July 15, 2003 are entitled to vote at the meeting or any
adjournment of the meeting.
By Order of the Board of Directors,
/s/ Todd A. Daniels
Todd A. Daniels
Secretary
Lenexa, Kansas
August 8, 2003
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOUR SHARES
CANNOT BE VOTED UNLESS YOU SIGN AND RETURN A PROXY OR VOTE BY BALLOT AT THE
MEETING.
1
ELECSYS CORPORATION
15301 West 109th Street
Lenexa, Kansas 66219
PROXY STATEMENT
GENERAL INFORMATION
Solicitation and Revocability of Proxies
The enclosed proxy is being solicited on behalf of the Board of Directors
of Elecsys Corporation for use at the annual meeting of the stockholders to be
held on September 9, 2003, or at any adjournment thereof, at 2:00 p.m. local
time, at the Lenexa Conference Center, 11184 Lackman Road, Lenexa, Kansas. Any
proxy given does not affect the right to vote in person at the annual meeting
and may be revoked at any time before it is exercised by notifying Todd A.
Daniels, Secretary, by mail, telegram or facsimile, or by appearing at the
annual meeting in person and casting a ballot. This proxy statement and the
proxy were first mailed to stockholders on or about August 8, 2003.
All expenses of solicitation will be borne by the Company. In addition to
solicitations by mail, employees and directors of the Company may solicit
proxies in person or by telephone. We do not expect to pay any compensation for
the solicitation of proxies.
Voting Procedures
Shares represented by a properly signed proxy received pursuant to this
solicitation will be voted in accordance with instructions thereon. If the proxy
is properly signed and returned and no instructions are given on the proxy with
respect to the matters to be acted upon, the shares represented by the proxy
will be voted at the annual meeting or any adjournment thereof: (i) for the
election, as directors of the Company, of the nominees named in this proxy, and
(ii) for the ratification of the appointment of Ernst & Young LLP as independent
public accountants of the Company. Each of the nominees hereinafter named has
indicated his willingness to serve if elected, and it is not anticipated that
either of them will become unavailable for election. However, if any of the
nominees should unexpectedly become unavailable for election for any reason, the
shares represented by the proxy will be voted for such substituted nominee(s) as
the Board of Directors may name.
The enclosed proxy confers discretionary authority to the proxyholders to
vote on any other business that may properly come before the annual meeting or
any adjournment thereof. The Board of Directors is not aware of any other
business, other than those matters described in this proxy statement and except
for matters incident to the conduct of the annual meeting, to be presented for
action at the annual meeting and does not itself
2
intend to present any such other business. However, if any such other business
does come before the annual meeting or any adjournment thereof, shares
represented by proxies properly signed and returned pursuant to this
solicitation will be voted in the discretion of the Board of Directors.
The two nominees for director receiving the greatest number of votes at the
annual meeting will be elected as directors. Any shares not voted (whether by
abstention, broker non-vote, or otherwise) have no impact in the election of
directors except to the extent the failure to vote for an individual results in
another individual receiving a larger proportion of the total votes. The
ratification of the appointment of independent public accountants requires the
affirmative vote of a majority of shares present in person or represented by
proxy and that voted on the matter. For purposes of determining the outcome of
the vote on the appointment of accountants, an instruction to "abstain" from
voting on a proposal will have the impact of a "NO" vote. "Broker non-votes,"
that occur when brokers are prohibited from exercising discretionary voting
authority for beneficial owners who have not provided voting instructions, are
not counted for the purpose of determining the number of shares present in
person or represented by proxy. They will have no impact on the vote to ratify
the appointment of accountants.
Only holders of common stock of the Company of record as of the close of
business on July 15, 2003, are entitled to vote at the annual meeting. At the
close of business on that date, 2,791,331 shares of common stock were issued and
outstanding. Holders of common stock are entitled to one vote per share held on
the record date. Shares cannot be voted at the annual meeting unless the record
owner is present in person or represented by proxy.
SECURITY OWNERSHIP
Stock Ownership of Principal Stockholders and Management
The following table sets forth the beneficial ownership of shares of the
Company's common stock as of June 30, 2003, by (i) the stockholders known by the
Company to own beneficially more than 5% of the common stock, (ii) each director
of the Company who owns beneficially any common stock, (iii) each executive
officer named in the "Summary Compensation Table," and (iv) all directors and
executive officers of the Company as a group. Unless otherwise indicated, the
Company believes that those stockholders listed below have sole voting and
investment power with respect to the common stock indicated as beneficially
owned by them.
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Amount and Nature of
Beneficial Owner Percent
Name and Address of Beneficial Owner (1) of Class
- -----------------------------------------------------------------------------------------------
KCEP Ventures II, L.P. 503,115 (2) 18.0%
233 West 47th Street
Kansas City, MO 64112
David J. Schulte 503,115 (3) 18.0%
Robert D. Taylor 147,300 (4) 5.3%
Karl Gemperli 129,335 (5) 4.6%
Michael J. Meyer 63,500 (6) 2.3%
A. Kyle Reinoehl 16,667 (7) *
Michael D. Morgan 11,667 (8) *
All directors and officers as a group (7 persons) 880,255 (9) 31.5%
* Less than 1%.
(1) Pursuant to the rules of the Securities and Exchange Commission ("SEC"),
shares of common stock of the Company that an individual or a group has a right
to acquire within 60 days pursuant to the exercise of options or warrants are
deemed to be outstanding for the purpose of computing the percentage of
ownership of such individual or group, but are not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person shown in
the table.
(2) According to a Schedule 13G filed as of February 16, 2000, KCEP Ventures
II, L.P. ("KCEP") reported beneficial ownership as to 410,715 shares of common
stock of the Company held as of February 16, 2000. During the fiscal year 2002,
a modification to the Convertible Subordinated Debenture increased the number of
exercisable shares that could be acquired hereunder to 259,067 due to the
lowering of the exercise price to $1.93 per share. As of the record date, the
total beneficial ownership of KCEP is 503,115, which is made up of the
following: (i) 198,413 shares of common stock are owned of record by KCEP, (ii)
259,067 shares of common stock are issuable upon the conversion of the $500,000
principal amount Convertible Subordinated Debenture issued to KCEP, and (iii)
45,635 shares of common stock are issuable upon the exercise of a warrant issued
to KCEP.
(3) Mr. Schulte is a Partner and Managing Director of KCEP which owns 503,115
shares of common stock of the Company. Mr. Schulte in his capacity as a managing
director of KCEP may be deemed to own these shares. Mr. Schulte disclaims
beneficial ownership of these shares.
(4) Includes presently exercisable options to purchase 5,000 shares of common
stock of the Company.
(5) Includes presently exercisable options to purchase 41,667 shares of common
stock of the Company.
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(6) Includes presently exercisable options to purchase 40,000 shares of common
stock of the Company.
(7) Includes presently exercisable options to purchase 16,667 shares of common
stock of the Company.
(8) Includes presently exercisable options to purchase 10,667 shares of common
stock of the Company.
(9) Includes presently exercisable options to purchase 117,335 shares of common
stock of the Company held by executive officers and directors as a group,
259,067 shares of common stock issuable to KCEP on the Convertible Subordinated
Debenture and 45,635 shares of common stock issuable on the exercise of a
warrant issued to KCEP both as more thoroughly described in footnote (2).
Section 16(a) Beneficial Ownership Reporting Compliance
To the Company's knowledge, based solely on review of copies of reports
filed with the Securities and Exchange Commission and written representations
that no other reports were required during the fiscal year ending April 30,
2003, all Section 16(a) filing requirements applicable to the officers,
directors and beneficial owners of more than 10 percent of the Company's equity
securities were complied with on a timely basis.
I. ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, with
the term of office of each class ending in successive years. The terms of the
director of Class I expire with this annual meeting. The Class II directors will
serve until the 2004 annual meeting of Stockholders and the Class III director
until 2005.
NOMINEES FOR DIRECTORS
The following information is given with respect to the nominees for election.
Class I - Term to Expire in 2006
Robert D. Taylor, age 56, has served as a director of the Company since
September 1994. Mr. Taylor is President and Chief Executive Officer of Executive
AirShare Corporation. Executive AirShare Corporation charters, sells and
operates fractional turboprop aircraft from its locations in Wichita, Kansas and
Kansas City, Missouri. Since October 1995, Mr. Taylor also owns and is President
of Taylor Financial, a consulting and investment firm based in Wichita, Kansas.
Since 1996, Mr. Taylor has served as director of Commercial Federal Corporation,
parent company of Commercial Federal Bank, a federal savings bank headquartered
in Omaha, Nebraska. He also serves as a director on the Board of Stockade
Companies, Inc., of Hutchinson, Kansas, an 80-unit family restaurant chain and
as an Executive Committee Member on the Advisory Board for the University of
Kansas Business School. Mr. Taylor serves on the Company's Compensation and
Audit Committees.
5
Class II - Term to Expire in 2004
Karl B. Gemperli, age 39, is the Company's President and Chief Executive
Officer. He has also served as President and Chief Executive Officer of DCI,
Inc., the Company's operating subsidiary, since February 2000. Prior to joining
the Company, Mr. Gemperli was an information systems consultant for Catalyst
Software, last serving as Midwest Regional Manager from March 1999 to January
2000. From March 1997 to March 1999, Mr. Gemperli was an employee of the
Company, serving as Vice President of Manufacturing. Prior to joining the
Company, Mr. Gemperli was an employee of Goodrich Aerospace for more than eight
years. Mr. Gemperli has over 18 years of electronic manufacturing and management
experience as well as a Bachelor's degree in Aeronautical Engineering from the
Massachusetts Institute of Technology and a Master's degree in Manufacturing
Engineering from Boston University.
The Board of Directors recommends that the stockholders vote FOR the election of
Mr. Taylor and Mr. Gemperli.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
The following information is given with respect to the Class II and III
directors who will continue to serve as a director of the Company until the 2004
and 2005 annual meeting of Stockholders, respectively.
Class II - Term Expiring in 2004
Michael J. Meyer, age 47, has served as a director of the Company since its
organization in May 1991, as its Chairman until March 7, 1995 and again from
October 2001 to the present, and as its President from its formation in May 1991
through September 1991. Mr. Meyer is President of Merit Capital & Management,
Inc., an advisory firm engaged in providing interim management, capital raising,
and acquisition advisory services to growth-oriented and troubled public and
private companies, which he formed in May 1998. From August 1996 to May 1998,
Mr. Meyer was Co-Manager of Holden Capital Advisors, LLC, and prior to that was
a Senior Vice President with George K. Baum & Company, an investment banking
firm. Mr. Meyer, a certified public accountant, is a member of the Company's
Compensation Committee.
Class III - Term to Expire in 2005
David J. Schulte, age 42, has served as a director of the Company since February
2000. Since November 1994, Mr. Schulte has been a Managing Director of Kansas
City Equity Partners, a private equity firm. Mr. Schulte is a member of the
Missouri Bar, the AICPA, and the AIMR. Mr. Schulte also serves on the Board of
Directors of Inergy, L.P. Mr. Schulte serves on the Company's Audit Committee.
6
Committees and Director Meetings
The Board of Directors has an Audit Committee and a Compensation Committee.
Stockholders wishing to submit the name of a candidate for the Board of
Directors should submit the recommendation, along with biographical information,
to the Secretary of the Company.
The Audit Committee's responsibilities include: (i) retaining and
compensating the public accounting firm to be engaged to audit the Company; and
(ii) reviewing with the independent accountants the Company's quarterly results,
the plan for, and results of, the auditing engagement, and the Company's
internal accounting controls. In June 2003, the Board of Directors revised the
previously adopted charter for the Audit Committee which is attached hereto as
Annex A. The Audit Committee held seven meetings during fiscal year 2003. Mr.
Schulte and Mr. Taylor comprise the Audit Committee and are independent (as
defined in Section 121(A) of the listing standards of the American Stock
Exchange).
The Compensation Committee met twice during the last fiscal year and is
comprised of Mr. Taylor and Mr. Meyer. The Compensation Committee has been given
the responsibility of setting and administering the policies governing the
annual compensation of the Company's executive officers, as well as the
Company's benefit plans other than the Elecsys Corporation Stock Option Plan.
The entire Board administers the Elecsys Corporation Stock Option Plan.
The Board of Directors held twelve meetings during the fiscal year ended
April 30, 2003. During such fiscal year, each director attended at least 75% of
the total number of meetings of the Board of Directors and the total number of
meetings held by all Committees on which the director served.
Report of the Audit Committee
The Audit Committee has reviewed and discussed the audited financial
statements with management and has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees. The Audit Committee has received the
written disclosures and letter required by Independence Standards Board Standard
No. 1 from the independent auditor and has discussed with the auditor the
auditor's independence. The Audit Committee has considered whether the provision
of the non-audit services rendered by the Company's principal accountant are
compatible with maintaining the principal accountant's independence. Pursuant to
its review, the Audit Committee approved and authorized the Board of Directors
to include the audited financial statements in the Company's Annual Report on
Form 10-KSB for the last fiscal year for filing with the Securities and Exchange
Commission.
Robert D. Taylor, Chairman
David J. Schulte
Audit Committee of the Board of Directors
7
Current Auditor Information
Ernst & Young LLP has served as independent auditors of the Company and has
audited the financial statements of the Company since its organization in 1991.
The Audit Committee intends to reappoint Ernst & Young LLP as independent
auditors for the fiscal year ending April 30, 2004, subject to ratification by
the stockholders at the Meeting.
Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional
services rendered for the audit of the annual financial statements for the years
ended April 30, 2003 and 2002 and for the reviews of the financial statements
included in the quarterly reports on Form 10-QSB for the fiscal years 2003 and
2002 were $68,225 and $85,895, respectively.
Audit Related Fees. The aggregate fees billed by Ernst & Young LLP for
professional services rendered for audit related services for the year ended
April 30, 2003 were $17,025. Audit related services include fees for work on SEC
registration statements and filings, consents and acquisition related services.
There were no such fees in fiscal 2002.
Tax Fees. The aggregate fees billed by Ernst & Young LLP for professional
services rendered for tax fees for the fiscal years ended April 30, 2003 and
2002 were $25,410 and $16,610, respectively.
All Other Fees. The aggregate fees billed by Ernst & Young LLP for services
rendered to the Company, other than the services described above under "Audit
Fees," "Audit Related Fees," and "Tax Fees," for the fiscal years ended April
30, 2003 and 2002 were $0 and $16,650, respectively.
Director Compensation
Each director, who is not a salaried employee of the Company or otherwise
compensated by the Company pursuant to any management contract or otherwise, is
paid an annual retainer of $9,000 plus a fee of $250 for each regular, special
and committee meeting attended. An additional annual retainer of $3,000 is paid
to the Audit Committee Chairman and an additional annual retainer of $9,000 is
paid to the Chairman of the Board. The Chairman is also eligible to participate
in the Company's health, dental and life insurance plans with equivalent terms
of coverage, contribution and deductibles as the Chief Executive Officer of the
Company.
On July 21, 2003, the Company amended the Management Advisory Agreement
with Merit Capital & Management, Inc. ("Merit") effective October 31, 2003. The
original agreement was entered into on November 1, 1999 and the President of
Merit is Michael J. Meyer, Chairman of the Board of the Company. Pursuant to the
terms of this agreement, the Company agreed to pay Merit: (i) an advisory fee of
$18,000 on January
8
3, 2000 for work relating to the completion and integration of the DCI, Inc.
acquisition and associated financial transactions, and (ii) $6,000 per month
beginning on February 1, 2000 through November 1, 2001. The agreement was
modified in October 2001 to establish monthly compensation at $6,500, and has
been further amended so that, effective October 31, 2003, Merit will receive no
monthly compensation.
Executive Compensation
The following table sets forth information concerning cash and non-cash
compensation paid to, or accrued for the benefit of, the Company's officers
("Named Executive Officers") for all services rendered in all capacities to the
Company for the fiscal years ended April 30, 2003, 2002 and 2001.
Summary Compensation Table
Long Term
Annual Compensation Compensation
---------------------
Other Annual Securities Underlying All Other Compensation
Name and Principal Position Year Salary Bonus Compensation (1) Options/SARs (#) (2)
- ---------------------------------------------------------------------------------------------------------------------------
Michael J. Meyer (3) 2003 $ 78,000 $22,000 $ - 15,000 $ -
Chairman and Acting Chief 2002 $ 75,000 $ - $ - 20,000 $ -
Executive Officer 2001 $ 72,000 $ - $ - - $ -
Karl B. Gemperli (4) 2003 $140,004 $44,364 $ - 15,000 $4,200
President and Chief 2002 $140,004 $ - $ - 35,000 $2,100
Executive Officer, DCI, Inc. 2001 $140,004 $ - $ - - $ 726
A. Kyle Reinoehl (5) 2003 $118,000 $11,990 $5,400 10,000 $3,540
Vice President-Business 2002 $116,000 $ 5,000 $5,400 20,000 $1,740
Development, DCI, Inc. 2001 $ 9,583 $ - $ - 15,000 $ -
Michael D. Morgan 2003 $ 94,999 $26,378 $ - 11,000 $2,850
Vice President-Manufacturing, 2002 $ 94,995 $ - $ - 29,000 $2,850
DCI, Inc. 2001 $ 87,500 $ - $ - 1,000 $1,973
(1) Includes $5,400 for an automobile allowance for Mr. Reinoehl.
(2) Consists of Company matching contributions made on behalf of the Named
Executive Officers under the Company's 401(k) Savings Plan.
(3) In 2003, the Company paid Merit Capital & Management ("Merit") $6,500 per
month as part of a Management Advisory Agreement. Mr. Meyer is President of
Merit. The agreement is further described within this proxy statement. Effective
July 21, 2003, Mr. Meyer is no longer the Acting Chief Executive Officer of the
Company.
(4) Mr. Gemperli was appointed on July 21, 2003 as the Company's President and
Chief Executive Officer.
(5) Mr. Reinoehl joined the Company in March 2001.
9
Stock Options
The following table sets forth information concerning stock option grants
made to the Named Executive Officers in the fiscal year ended April 30, 2003.
Option Grants In Last Fiscal Year
% of Total
Options
Number of Securities Granted to
Underlying Options Employees in Exercise Price
Name Granted (#) Fiscal Year ($/sh) Expiration Date
- ------------------------------------------------------------------------------------------------
Michael J. Meyer 15,000 19.7% $ 1.25 12/2/2012
Karl B. Gemperli 15,000 19.7% $ 1.25 12/2/2012
A. Kyle Reinoehl 10,000 13.2% $ 1.25 12/2/2012
Michael D. Morgan 11,000 14.5% $ 1.25 12/2/2012
The following table sets forth information concerning stock options
exercised by the Named Executive Officers during the fiscal year ended April 30,
2003, and the number of shares and the value of options outstanding as of April
30, 2003, for each Named Executive Officer.
Aggregate Option Excercises and Option Values as of April 30, 2003
Number of Securities Value of Unexercised In-the-
Unexercised Options at 4/30/03 Money Options at 4/30/03
(#) ($) (1)
-----------------------------------------------------------------
Shares Acquired Value
Name on Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
Michael J. Meyer - - 40,000 - 35,000 -
Karl B. Gemperli - - 41,667 58,333 11,667 38,333
A. Kyle Reinoehl - - 16,667 28,333 6,667 23,333
Michael D. Morgan - - 10,667 30,333 9,667 30,333
(1) Based on the closing price of the common stock on the American Stock
Exchange of $1.58 per share on April 30, 2003, less the option
exercise price if the exercise value of the option is less than the
closing price.
EXECUTIVE OFFICERS
The Company currently has two executive officers, Karl B. Gemperli,
President and Chief Executive Officer and Todd A. Daniels, who serves as the
Company's Chief Financial Officer. Mr. Gemperli and Mr. Daniels also serve as
officers of DCI, Inc., the wholly-owned operating subsidiary of the Company. The
executive officers of DCI, Inc. as well as certain biographical information
about them are as follows:
Name Age Position
- ------------------- --- -------------------------------------------------
Karl B. Gemperli 39 President and Chief Executive Officer, Elecsys
Corporation and President and Chief Executive
Officer, DCI, Inc.
A. Kyle Reinoehl 37 Vice President - Business Development, DCI, Inc.
10
Michael D. Morgan 49 Vice President - Manufacturing, DCI, Inc.
Todd A. Daniels 35 Vice President and Chief Financial Officer, Elecsys
Corporation and Vice President - Finance,
DCI, Inc.
Karl B. Gemperli has served as President of DCI, Inc. since February 2000 and
was promoted to President and Chief Executive Officer of the Company in July
2003. Prior to joining the Company, Mr. Gemperli was an information systems
consultant for Catalyst Software, last serving as Midwest Regional Manager from
March 1999 to January 2000. From March 1997 to March 1999, Mr. Gemperli was an
employee of the Company, serving as Vice President of Manufacturing. Prior to
joining the Company, Mr. Gemperli was an employee of Goodrich Aerospace for more
than eight years. Mr. Gemperli has over 18 years of electronic manufacturing and
management experience as well as a Bachelor's degree in Aeronautical Engineering
from the Massachusetts Institute of Technology and a Master's degree in
Manufacturing Engineering from Boston University.
A. Kyle Reinoehl has served as Vice President-Business Development of DCI, Inc.
since March 2001. Prior to joining the Company, Mr. Reinoehl was an employee of
Future Electronics, an electronic component distributor based in Montreal,
Quebec, Canada. Mr. Reinoehl was with Future Electronics for 6 years, last
serving as General Manager of the Kansas City division. Prior to that, Mr.
Reinoehl was an employee of Harmon Industries for 5 years.
Michael D. Morgan has served as Vice President-Manufacturing of DCI, Inc. since
March 2000. Prior to joining the Company, Mr. Morgan was an employee of Goodrich
Aerospace, Test Systems Division for more than eleven years, last serving as
Director of Manufacturing and prior to that was an employee of Kustom Signals
for over eight years. Mr. Morgan has over 22 years of electronic manufacturing
experience.
Todd A. Daniels joined the Company in April 2002 as Vice President-Finance of
DCI, Inc. and was promoted to Vice President and Chief Financial Officer of
Elecsys Corporation in October 2002. Prior to joining the Company, from May 2001
to April 2002, Mr. Daniels was Manager of Corporate Forecasting and Reporting
for EPIQ Systems, Inc., a developer of market-leading software solutions for
workflow management and data communications infrastructure. From April 1998 to
May 2001, Mr. Daniels held various accounting and financial management positions
with Honeywell International, Inc. and AlliedSignal, Inc. Mr. Daniels is a
Certified Public Accountant with over 13 years of public accounting and private
industry accounting experience.
Equity Compensation Plan Information
The following table sets forth (a) the number of securities to be issued
upon exercise of outstanding options, warrants and rights, (b) the weighted
average exercise price of outstanding options, warrants and rights and (c) the
number of securities
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remaining available under equity compensation plans (excluding securities
reflected in column (a)).
(a) (b) (c)
Number of securities Weighted-average
to be issued upon price of Number of securities remaining
exercise of outstanding available for future issuance under
outstanding options, options, warrants under equity compensation plans
Plan Category warrants and rights and rights (excluding those in column (a))
- ------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by stockholders 299,250 $1.28 139,500
Equity compensation plans not
approved by stockholders - - -
Total 299,250 $1.28 139,500
The Elecsys Corporation Stock Option Plan is the Company's only equity
compensation plan for purposes of the foregoing table.
II. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors of the Company has appointed
Ernst & Young LLP as independent public accountants to audit and certify the
Company's financial statements for the fiscal year ending April 30, 2004,
subject to ratification by the stockholders at the annual meeting.
Ernst & Young LLP has examined the financial statements of the Company
since the Company was organized in 1991. Representatives of Ernst & Young LLP
will be present at the annual meeting, will be given the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions. The affirmative vote of a majority of the shares
present and entitled to vote at the annual meeting is required for the approval
of this proposal to ratify the appointment. If the stockholders do not ratify
the appointment of Ernst & Young LLP, the Audit Committee will reconsider the
selection of independent public accountants.
The Board of Directors recommends that the stockholders vote FOR the
approval of the appointment of Ernst & Young LLP.
Stockholder Proposals for 2004 Annual Meeting
Stockholder proposals to be considered for inclusion in the proxy statement
and considered at the 2004 annual meeting of the Stockholders must be received
by the Company no later than April 2, 2004. Any such proposals should be
directed to the Secretary of the Company at 15301 West 109th Street, Lenexa,
Kansas 66219.
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Proposals of Stockholders not intended for inclusion in the Company's 2004
proxy statement must be received by the Company in writing no later than June
16, 2004 in order to preclude the Company's use of its discretionary proxy
voting authority if the proposal is raised at the 2004 annual meeting.
Financial Statements
The Annual Report to Stockholders of the Company for the fiscal year ended
April 30, 2003, is enclosed with this proxy statement. The financial statements
of the Company are set forth in that Annual Report.
Other Matters
The Board of Directors is not aware of any matter that will be presented
for action at the annual meeting other than the matters set forth herein. If
other matters properly come before the meeting, it is intended that the holders
of the proxies hereby solicited will vote thereon in accordance with their best
judgment.
By Order of the Board of Directors,
/s/ Karl B. Gemperli
Karl B. Gemperli
President and Chief Executive Officer
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ANNEX A
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
There shall be a committee of the Board of Directors to be known as the
Audit Committee. The Audit Committee shall consist of two or more
directors, as determined by the Board of Directors, each of whom: (i) other
than in their capacity as a member of the Board of Directors or any board
committee thereof does not accept any consulting, advisory, or other
compensatory fee from the Company; (ii) shall not be an affiliated person
of the Company or any of the Company's subsidiaries; and (iii) shall not be
an officer or employee of the Company but shall be independent of the
management of the Company and free of any relationship that, in the opinion
of the Board of Directors, would interfere with their exercise of
independent judgment as a committee member.
A. Definition of Independence
The following persons are not considered independent:
(1) a director who is employed by the Company or any of its affiliates for
the current year or any of the past three years;
(2) a director who accepts compensation from the Company or any of its
affiliates in excess of $60,000 during the previous fiscal year, other
than compensation for board service, benefits under a tax-qualified
retirement plan, or non-discretionary compensation;
(3) a director who is a member of the immediate family of an individual
who is, or has been in any of the past three years, employed by the
Company or any of its affiliates as an executive officer. Immediate
family includes a person's spouse, parents, children, siblings,
mother-in-law, father-in-law, brother-in-law, sister-in-law,
son-in-law, daughter-in-law, and anyone who resides in such person's
home;
(4) a director who is a partner in, or a controlling stockholder or an
executive officer of, any for-profit business organization to which
the Company made, or from which the Company received, payments (other
than those arising solely from investments in the Company's
securities) that exceed 5% of the Company's or business organization's
consolidated gross revenues for that year, or $200,000, whichever is
more, in any of the past three years; or
(5) a director who is employed as an executive of another entity where any
of the Company's executives serve on that entity's compensation
committee.
All members of the Audit Committee shall be able to read and understand
fundamental financial statements, including a company's balance sheet,
income statement, and cash flow statement at the time of their appointment
to the Audit Committee.
The members of the Audit Committee shall be elected by the Board of
Directors at the annual meeting of the Board of Directors to serve a term
of one (1) year or until their
successors shall be duly elected and qualified. The Board of Directors will
appoint a Chair to preside at the Audit Committee meetings and schedule
meetings as appropriate. In the determination of the Board of Directors, at
least one individual shall meet the definition of "audit committee
financial expert" as set forth in the Sarbanes-Oxley Act of 2002 and the
rules promulgated thereunder.
The Audit Committee shall be provided appropriate funding, as determined by
the Audit Committee, in its capacity as a committee of the Board of
Directors, for the payment of (i) compensation to the independent auditors
engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company; (ii)
compensation to any advisors employed by the Audit Committee; the
employment of which the Audit Committee determines necessary to carry out
its duties; and (iii) ordinary administrative expenses of the Audit
Committee that are necessary or appropriate in carrying out its duties.
II. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: (i)
the financial reports and other financial information provided by the
Company to any governmental body or the public; (ii) the Company's systems
of internal controls regarding finance, accounting, legal compliance and
ethics that management and the Board of Directors has established; and
(iii) the Company's auditing, accounting and financial reporting processes
generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster compliance with, the
Company's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are as follows:
• To serve as an independent and objective party to monitor the
Company's financial reporting process and internal control system.
• To review and appraise the audit efforts of the Company's independent
auditors and internal auditing department.
• To provide an open avenue of communication among the independent
auditors, financial and senior management, the internal auditing
department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
III. MEETINGS
The Audit Committee shall meet as often as it determines, but not less
frequently than quarterly. The Chair of the Audit Committee shall prepare
or approve an agenda in advance of each meeting. The Chief Executive
Officer, Chief Financial Officer, and a representative from independent
auditors may be invited to all meetings. Other
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management may be invited as necessary. Non-committee members may be
excused from attendance at any meeting or portion of any meeting by the
Chair.
As part of its job to foster open communication, the Audit Committee should
meet at least annually with management and the independent auditors in
separate executive sessions to discuss any matter that the Audit Committee
or each of these groups believes should be discussed privately. In
addition, the Audit Committee or its Chair should meet with the independent
auditors and management quarterly to review the Company's financial
statements and significant findings based upon the auditor's limited review
procedures.
IV. RESPONSIBILITIES
To fulfill its duties and responsibilities the Audit Committee shall:
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
2. Review the Company's financial statements prior to the release of
year-end earnings and the Company's audited financial statements prior
to filing the Company's Annual Report on Form 10-KSB, including the
Company's disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
3. Review the Company's quarterly financial results prior to the release
of quarterly earnings and the Company's financial statements, after
reviewed by outside auditors, prior to filing the Company's Quarterly
Report on Form 10-QSB, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."
4. Review, as appropriate, any other material financial information
submitted to any governmental or public body, including any
certification, report, opinion, or review rendered by the independent
auditors.
Independent Auditors
5. Be directly responsible for the appointment, compensation, retention
and oversight of the work performed by the independent auditors. The
Audit Committee has the ultimate authority and responsibility to
select, evaluate, determine funding for and, where appropriate,
replace the independent auditors (or to nominate the independent
auditors to be proposed for stockholder approval in any proxy
statement). The independent auditors must report directly to the Audit
Committee.
6. Consider whether the engagement of the independent auditors for
non-audit services is compatible with maintaining the independent
auditors' independence
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and review the fees for such services. Approve, in advance, any
non-audit services.
7. Ensure receipt from the independent auditors of a formal written
statement delineating all relationships between the auditor and the
Company, consistent with Independence Standards Board Standard No. 1.
8. Actively engage in dialogue with the independent auditors and legal
counsel with respect to any disclosed relationships or services that
may impact the objectivity and independence of the independent
auditors. In considering independence, the Audit Committee shall
receive confirmation that the independent auditors are independent
pursuant to Rule 2-01 of Regulation S-X.
9. Take, or recommend that the full Board of Directors take, appropriate
action to oversee the independence of the independent auditors.
10. Approve fees and other significant compensation to be paid to the
independent auditors.
11. Meet with the independent auditors to review the scope of the proposed
audit for the current year, the audit procedures to be utilized, the
location, reliance on management, and staffing for the audit.
12. Confirm that the audit partners of the independent auditors are
rotated in accordance with SEC requirements.
13. Assess the performance of the independent auditors and whether it is
in the best interest of the Company to regularly rotate its
independent auditors.
14. Review the experience and credentials of the senior individuals
working for the independent auditors on the Company's account.
15. Review the policies and procedures of the independent auditors with
respect to quality control.
16. Following each audit by the independent auditors, obtain from the
independent auditors assurance that Section 10A of the Private
Securities Litigation Reform Act of 1995 has not been implicated.
17. Following each audit by the independent auditors, discuss and review
with the independent auditors the report the independent auditors are
required to provide the Audit Committee regarding: (i) all critical
accounting policies and practices to be used; (ii) all alternative
treatments within GAAP for policies and practices related to material
items that have been discussed with management, including
ramifications of the use of such alternative disclosures and
treatments and the treatment preferred by the independent auditors;
and (iii) other material written communications between the
independent auditors and the management.
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18. In connection with the Company's year-end financials, discuss with
financial management and the independent auditors significant issues
regarding accounting principles, practices and judgments and any items
required to be communicated by the independent auditors in accordance
with Statement on Accounting Standards No. 61.
19. Review any opinions of the independent auditors that management
received on the application of accounting principles to a completed,
proposed or hypothetical transaction pursuant to Statement on Auditing
Standards No. 50, and discuss with financial management and the
independent auditors how the election of alternative methods permitted
under GAAP would impact the financial statements.
20. Discuss and review with management and the independent auditors any
off-balance sheet arrangements, as well as their effect and the effect
of emerging issues arising out of accounting and regulatory proposals
on the financial statements of the Company.
21. Discuss and review with management and the independent auditors any
non-GAAP financial measures disclosed by the Company, the most
directly comparable GAAP financial measure and the reconciliation
between the two financial measures.
22. In connection with the Company's interim financials, discuss with
financial management and independent auditors any significant changes
to the Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with Statement
on Accounting Standards No. 71. The Chair of the Audit Committee may
represent the entire Audit Committee for purposes of the quarterly
review and communication.
23. Discuss and review with management and the independent auditors any
correspondence with the American Stock Exchange or governmental
agencies concerning material issues related to the financial
statements, audits or accounting policies of the Company.
24. Discuss and review with management and the independent auditors any
complaints by employees involving material concerns related to the
financial statements, audits or accounting policies of the Company.
25. Consider and approve, if appropriate, significant changes to the
Company's auditing and accounting principles and practices as
suggested by the independent auditors or management.
Improvement Process
26. Meet periodically with management to review the Company's major
financial risk exposure and the steps management has taken to monitor
and control such exposures.
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27. Establish procedures for (i) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters; and (ii) the confidential,
anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
Proxy Statement
28. Approve the report of the Audit Committee required by the rules of the
SEC to be included in the Company's annual proxy statement.
29. Oversee the publication of this Charter at least every three years in
the Company's annual proxy statement in accordance with SEC
regulations.
Miscellaneous
30. As appropriate, obtain advice and assistance from outside legal,
accounting or other advisors.
31. Review with the Company's counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies related to financial matters and any material reports or
inquiries related to financial matters that are received from
regulators or governmental agencies.
32. Periodically conduct a self-assessment of the Audit Committee's
performance.
33. Although it is not the duty of the Audit Committee to conduct
investigations on behalf of the Company, it shall have the power to do
so in connection with audit-related matters.
34. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Audit Committee or the
Board of Directors deems necessary or appropriate.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditors. Nor is it the duty of
the Audit Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditors or to assure compliance with
laws and regulations.
Adopted: June 18, 2003
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THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH OF THE TWO PROPOSALS.
Either of said proxies present and acting at said meeting or any adjournment
thereof shall have and may exercise all of the powers of either said proxies.
The undersigned hereby ratifies and confirms that all said proxies, or either of
them or their substitutes, may lawfully do or cause to be done by virtue hereof,
and acknowledges, receipt of the notice of said meeting and the Proxy Statement
accompanying it.
Dated: , 2003
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Signature
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Signature
Please insert date of signing and sign
exactly as name appears on your stock
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administrator, executor, trustee or
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on the reverse bottom of this card. o Return the proxy card in the
o Follow the simple recorded instructions. postage-paid envelope provided.
PROXY
ELECSYS CORPORATION
15301 WEST 109TH STREET, LENEXA, KS 66219
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS ON SEPTEMBER 9, 2003
The Board of Directors recommends a vote for the two proposals.
The undersigned hereby appoints Michael J. Meyer and Karl B. Gemperli, or each
of them, or their designees, each with full power of substitution, as lawful
proxies to represent and vote all of the shares of Common Stock which the
undersigned is entitled to vote at the annual meeting of the stockholders of the
Company to be held at the Lenexa Conference Center, 11184 Lackman Road, Lenexa,
Kansas on Tuesday, September 9, 2003, commencing at 2:00 p.m., local time on
that day, and at any adjournment thereof, as fully and with the same effect as
the undersigned might or could do if personally present, with respect to the
following matters and, in their discretion upon any other matters that may
properly come before the meeting:
1. Approval of the election of:
(01) Robert D. Taylor as a Class I Director to serve for a term of three
years expiring in 2006.
| | FOR | | WITHHOLD AUTHORITY
(02) Karl B. Gemperli as a Class II Director to serve for a term of one
year expiring in 2004.
| | FOR | | WITHHOLD AUTHORITY
2. Ratification of the appointment of Ernst & Young LLP as independent public
accountants of the Company.
| | FOR | | AGAINST | | ABSTAIN
